BofA Upgrades Coinbase to Buy, Sees Revenue Diversification Beyond Retail Crypto Trading

Bank of America upgraded its rating on Coinbase shares to buy from neutral and left is price target unchanged at $340.

• Bank of America, in a note on Thursday, cited increasing signs of revenue diversification beyond just retail crypto trading, a trend that it thinks will accelerate this year.

• The bank forecasts subscription and services revenue will increase to 16% of Coinbase’s total revenue in 2023 from 12% in the third quarter of 2021.

• The trend will be driven by a combination of offerings such as staking, earn campaign, Coinbase’s non-fungible token platform and decentralized finance products such as DeFi yield, the report said.

• Scaling of these non-trading revenue streams could also lead to increased interest in the stock from institutional investors, Bank of America noted.

• Uncertainty around regulation remains a potential risk, but Coinbase’s “technology/innovation and brand are positive differentiators,” the report added. The bank also sees potential upside to the company’s fourth-quarter guidance.

• Coinbase shares rose 1% in pre-market trading on Thursday.

Read more: Coinbase Offers Access to DeFi Yields With DAI and Compound